Rollback: Repealing Big Government Before the Coming Fiscal Collapse

244 Pages·2011·1.3 MB·English

by  Thomas E. Woods

Table of Contents

Title Page
Dedication
CHAPTER 1 - Is It Already Too Late?
The Crisis
CHAPTER 2 - Barack Obama and “Change We Can Believe In”
How We Got Here
Why Higher Costs?
For the Economy, Red Bull Is No Substitute for Sleep
But Wait—There’s More
CHAPTER 3 - Government and Economic Crisis: Savior or Perpetrator?
Too Big to Fail?
Wasn’t “Deregulation” the Culprit?
Fake Deregulation Causes Problems? Blame Them on Capitalism
You Need Your Head Examined, Says Harvard
CHAPTER 4 - Elephant in the Living Room: The Real Story of the Federal
Reserve
Our Enemy, Inflation
CHAPTER 5 - Less Bang for the Buck: Pentagon Spending, the Military, and
the ...
The Unseen
Is Military Spending Too Low?
CHAPTER 6 - The Myth of “Good Government”
But Don’t We Need Wealth Redistribution Programs?
But What about Federal Education Programs?
Doesn’t Sweden Show Us the Way?
Won’t Monopolies Swallow Us Up?
Wouldn’t We Be Helpless, and Probably Dead, Without the Regulatory
Apparatus?
Without Government Science Funding, Everyone Would Be an Idiot
Don’t We Need the War on Drugs?
CHAPTER 7 - Rollback
Acknowledgements
Notes
Index
About the Author
Copyright Page

To Heather
There is no doubt that the real destroyer of the liberties of any people is he who
spreads among them bounties, donations and largesse.
—Plutarch

The more corrupt the State, the more numerous the laws.
—Tacitus
CHAPTER 1

Is It Already Too Late?

Nobody trusts the government, pollsters tell us. In April 2010, the Pew Research
Center found that only 22 percent of Americans polled said they trusted the
government at least most of the time.1
I wish I believed it. Most Americans seem to have a childlike confidence in
government. They may be skeptical of the politician who insists he’s been
faithful to his wife, but they buy all the major claims government makes for
itself. And although they know the government’s finances can be dicey, they
seem to console themselves that the experts are in charge, and that somehow
everything will work out. Few entertain even the possibility of any sort of
general collapse or default.
This confidence is about to be severely shaken. A systemic crisis is poised to
strike an unprepared America, as the federal government is forced to renege on
its impossible promises. It will no longer be the godlike dispenser of bounties,
the miracle worker that summons bread from stones.
For even if (1) the robust economic recovery Americans have been waiting for
finally arrives, (2) the federal debt becomes manageable, and (3) the nearly $1
trillion in annual interest payments on that debt—a permanent part of the federal
budget within ten years—is a price Americans are willing to pay, we’re still
sunk. The federal entitlement programs on which generations of Americans have
been taught to rely and to base their expectations for retirement will go bust in
our lifetimes. The aging of the population guarantees it. The resources do not
and will not exist to make good on these promises.
Most of the people reading this book will live through one of the most
significant periods of change in American history. The scale of the coming,
inevitable spending cuts will be unlike anything Americans have ever
experienced during peacetime. Americans have never seen federal spending
scaled back. Even when the newspapers speak of “budget cuts,” they don’t
actually mean the budget will be lower than it was the previous year. They mean
only that its rate of growth is falling. Government is never cut. But it will be.
Between now and the entitlement collapse, our representatives in government
will keep trying to kick the can down the road. They will buy time with marginal
reforms in the programs involved. When that time runs out, they’ll try the same
thing again. With default staring them in the face, they will try tax increases.
They will try borrowing. They will try printing the money. None of these
approaches will work, as I intend to show, though if employed vigorously
enough they just might wreck the economy, including the dollar itself.
But in crisis there is opportunity.
Former White House Chief of Staff Rahm Emanuel, who notoriously
observed that a crisis should never be allowed to go to waste, was on to
something. Though his meaning was clear enough—that government should
exploit crisis situations to ram through the laundry list of programs that would be
politically prohibitive during times of calm—he arrived at the wrong conclusion.
The coming fiscal crisis is an opportunity to take a careful second look at
government, its claims, and its promises, and to see how much of it holds up to
the harsh light of reason. Forget the comic-book rendition of government
achievements we were all taught in sixth grade. This book paints a far different
picture. And with that picture in mind, the unavoidable slashing of the federal
budget that will have to take place is cast in rather a different light. Instead of a
regrettable exercise undertaken out of grim necessity, it will be an enormous
stride forward into a much brighter future.
The critical first step for checking the seemingly unstoppable federal advance
is to stick a dagger through the heart of the myths by which government has
secured the confidence and consent of the people. We know these myths by
heart. Government acts on behalf of the public good. It keeps us safe. It protects
us against monopolies. Without it, America would be populated by illiterates,
half of us would be dead from quack medicine or exploding consumer products,
and the other half would lead a feudal existence under the iron fist of private
firms that worked us to the bone for a dollar a week.
But let’s suppose that the federal government has in fact been an enemy of the
people’s welfare, and that the progress in our living standards has occurred in
spite of its efforts. It pits individuals, firms, industries, regions, races, and age
groups against each other in a zero-sum game of mutual plunder. It takes credit
for improvements in material conditions that we in fact owe to the private sector,
while refusing to accept responsibility for the countless failures and social ills to
which its own programs have given rise. Rather than bringing about the “public
good,” whatever that means, it rules over us through a series of fiefdoms seeking
bigger budgets and more power. Despite the veneer of public-interest rhetoric by
which it hides its real nature, it is a mere parasite on productive activity and a net
minus in the story of human welfare.
Now if this is a more accurate depiction of the federal government, and I
intend to argue that it is, we are likely to have a different view of the
consequences of the coming fiscal collapse. So an institution that has seized our
wealth, held back the rise in our standard of living, and deceived schoolchildren
into honoring it as the source of all progress, will have to be cut back? What’s
the catch? This is no calamity to be deplored. It is an opportunity to be seized.
Still another purpose of this book, therefore, is to demonstrate that we would not
only survive but even flourish in the absence of countless institutions we are
routinely told we could not live without.
Americans have given government the benefit of the doubt because they have
thoughtlessly accepted a schoolboy narrative of how much worse off we would
all be without it. If the coming disaster is to be averted and future crises
prevented from arising, the smiley-face version of government we learned in
junior high needs to be dismantled and discarded forever. Chapter 4, for
instance, spends some time discussing portions of the federal regulatory
apparatus. It does so not because the regulatory agencies are themselves
particularly expensive (their indirect costs on the private sector are another
matter), but because they form a significant part of the mythological edifice that
gives rise to the public’s naïve confidence in government.
In speaking of averting the coming disaster, we can’t fool ourselves into
believing pain can be avoided. That horse has already left the stable. The federal
government has made it impossible for us to escape unscathed. The only way to
prevent the outright collapse on the horizon, a collapse that would surely be
followed by emergency government policies that could destroy the dollar and
with it the fortunes of the people, is by making severe cuts in the present. Some
of these, as this book will argue, will be easy, and in spite of the predictable
caterwauling by the interest groups involved, Americans would hardly notice
them. Others will be more difficult, particularly since they will need to be so
substantial and sudden. The best we can hope for is to endure some pain now in
order to avoid a systemic crisis later. The more we can do in the present, the less
severe will be the problem in the future, and the less likely our public servants
will be to wipe Americans out completely in the course of trying to overcome it.
Finally, this book proposes some methods by which the expansion of federal
power might be halted or reversed. Most of these approaches are
unconventional, as the nature of the situation demands. Some will be derided as
unrealistic, the usual complaint about suggestions that would actually work and
are obviously necessary. What is truly unrealistic, on the other hand, is the long-
term solvency of the federal government. A historic default is coming.
Wrenching changes will have to be made to prevent it. Few people in public life
dream of proposing such changes. Few Americans realize the depth of the
problem. Everyone thinks it can be pushed off until tomorrow, even as midnight
draws nearer.
In the short run, people’s lives will be disrupted, in some cases severely, and
there will be much human suffering for a generous people to alleviate. But in the
long run, our prospects are much brighter. When the crisis at last subsides, we
will emerge with a more just and humane society. We will have learned to care
for each other as families and neighbors once did. We will no longer look
superstitiously to one institution to devise solutions to the problems of 309
million people. Instead of seeking subsidies taken from our fellow Americans by
threats of state violence, we will have to seek wealth peacefully, by discovering
how we can best please our fellow man. The federal collapse will likewise yield
us a far freer and more prosperous society, in place of the maze of subsidies,
taxes, penalties, special privileges, and self-perpetuating bureaucracy that afflict
us now.
Federal bankruptcy, in short, may turn out to be one of the best things that
ever happened to America.